Executive Salaries And What It Means To The United States...

Executive Salaries and What it Means to our Economy The economy of the United States is by far the largest and most powerful economy in the entire world. The average family income is roughly $40,000 a year and our GDP (Gross Domestic Product) is well over 10 trillion dollars. The next closest country is Japan with 4 trillion dollars of total GDP.(Johnson Wales: Economics) The United States has so many large corporations it takes someone to run each one and it also take a lot of money to pay someone to be in charge of each one. Top companies in the United States range from automobile manufacturers to household appliance manufacturers to†¦show more content†¦Directors have awarded compensation packages that go well beyond what is required to attract and hold on to executives and have rewarded even poorly performing executives. These executive pay excesses come at the expense of shareholders as well as the company and its employees. Furt hermore, a poorly designed executive compensation package can reward decisions that are not in the long-term interests of a company. Excessive CEO pay is essentially a corporate governance problem. When CEOs have too much power in the boardroom, they are able to extract what economists call economic rents from shareholders (Economic rent is distinct from economic profit, which is the difference between a firms revenues and the opportunity cost of its inputs). The board of directors is supposed to protect shareholder interests and minimize these costs. At approximately two-thirds of US companies, the CEO sits as the boards chair. When one single person serves as both chair and CEO, it is impossible to objectively monitor and evaluate his or her own performance. What can be done about this? The best thing that can happen to let shareholders know about CEO executive pay excesses is to let it come to light. Companie s are required to file documents describing their executives compensation with the U.S. Securities and Exchange Commission (SEC); these often areShow MoreRelatedThe Controversial Issue of Executive Pay in America1253 Words   |  6 PagesThe Controversial Issue of Executive Pay in America The Controversial Issue of Executive Pay in America Over the past twenty years, America has seen a substantial amount of change and development amongst many technological industries. Old ideas have been revolutionized. Technology has been continuously upgraded time and time again. Americans slowly have to do less and less because new inventions are constantly increasing their abilities to do more for us. Cars are getting faster, phones areRead MoreDeveloping A Human Resource Development Strategy1621 Words   |  7 Pagesfirst aspects of making a global move is to develop a Human Resource development strategy. 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